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Tuesday, February 20, 2018

Does Loyalty still exist?

I was speaking on a Panel Discussion last week at
a conference hosted by Asia Retail Congress at Mumbai with some fantastic
speakers from the Indian Retail Ecosystem, where the topic for us was to
discuss Customer Loyalty. While preparing the points to ponder, I was wondering
whether Loyalty still exists in today’s context. Well, yes – it sounds crazy if
I say there is no Loyalty in the consumer business today. Don’t believe me?
Take a look.

The toothpaste and toothbrush – look how
consumers get swayed by newer options and attractive advertisements? There was a
joke that a dentist/compounder who would appear in such an ad for toothpaste
was once seen wearing a stethoscope! The body wash/soap – the options we see at
supermarkets. The clothes we wear – this one’s interesting. Let me ask you, is
the dress you are wearing right now – was it the same brand that you purchased
most recently? If yes, you are part of a small minority of consumers who are
still brand loyal. The so-called disruption by new-age startups who thundered
the e-commerce world a decade back and continue to bleed in billions – do consumers
have any loyalty still left over? Again, consumers prefer to buy from trusted
websites (is Trust=Loyalty? Later, on that) where they could probably have the
option of returning faulty goods sold by unscrupulous vendors on whom the
Amazons & the Flipkarts don’t have much command. A Big Billion Day or an
interesting Sale period – and consumers swing their loyalty there.

Let’s look at a few touchy, personal products.
Let me start with Gillette which I have personally been using for the past 2
decades. I started with a Presto plastic shaving razor worth Rs. 10 twenty years
back. I am now using the “Mach 3 Advanced” which is some Rs. 350+ per razor!
And while the Advertisement claims a 30-day use, it still warrants “Conditions Apply”
such as the skin tone, number of times repeating the shave and hard water. For
me, this is one classic case of Customer Loyalty where consumers have continued
to stick on with the Brand and its extensions such as Shaving Gel, After Shave,
Body Wash & so on. Let’s look at Sanitary Napkins. Women I know (and I don’t
discuss this with many!) use a particular brand/model – purely because of
operational comfort. Interestingly, Brands which come in with alternatives offer
sample packs or ones with fewer pads, so consumers can perhaps try and decide. Still,
the loyalty is extreme. Women continue to stick to their favourites.

Look at Café Coffee Day. With 1,500 cafes
across India over 2 decades, the brand continues to drive at least one lakh
consumers every day and sells over 50,000 cappuccinos daily! Cut to competition
– the nearest café chain Starbucks has just over 100 cafes pan-India although
the argument is that their daily turnover per café is 3x of CCD. Indeed, their
food prices are 3x of that of what we get at CCD and their beverages, at least
2x. So, that explains.

Royal Enfield was an underdog seven years back,
selling 1 lakh vehicles per annum. Now, they sell almost 1 lakh units per
month. Today, RE sells more motorcycles worldwide than all other premium brands
put together – some feat this.

So, does Loyalty exist? I have a hung verdict
here t least for now. The house is definitely split over this issue. For
certain products and categories, consumers show extreme loyalty while for some,
there hardly exists any loyalty. Travel, Food, even Luxury – take your pick.
Look through the lens and you’ll see how fragmented the so-called Customer Loyalty
is. And Loyalty Cards – well, I shall write a follow-up column on this shortly.

I am a Retail professional with over 18 year's experience. Started My Retail Journey scopping Ice-Cream at Baskin Robbins' first outlet in Chennai in 1997, have played a miniscule role in the Great Indian Retail Story which is yet to be fully told. Have worked with RPG Retail and The Future Group in Managerial roles. Set-up the first ever organized Retail business at Bangalore International Airport in 2006. Was responsible for setting up and operating 140 outlets for Cafe Coffee Day and 160 outlets for Royal Enfield. Visiting Faculty at B-Schools of repute since 2005. Been an Entrepreneur since Aug. 2014. Now running two start-ups.